McDonnell said state will weather shutdown

State can cover the lost funds; agencies are to assess their needs by Friday

September 30, 2013|By Cathy Grimes, cgrimes@dailypress.com

"Here we go again," Gov. Bob McDonnell said Wednesday as he addressed the looming federal government shutdown.

The governor and State Secretary of Finance Ric Brown said the state is in good shape to weather a short-term shutdown.

"We are as prepared as we can be," McDonnell said. We can offset the loss of funds."

McDonnell and Brown said the state can tap into the Federal Action Contingency Trust Fund and the Economic Contingency Fund to help cover losses. The governor also said he can use a "tool of last resort," and authorize deficit spending, with the state borrowing from itself. Brown said the state's general account balances have about $2 billion available for borrowing if the state resorts to that action.

McDonnell said a federal shutdown would not trigger tapping into the state's $1 billion rainy day fund.

McDonnell said he has asked state agencies and programs receiving federal funds to continue working through Friday as they assess the impact.

"I don't see any interruption of state services," McDonnell said.

Brown said federal dollars make up about 20 percent of the state's budget, and about two-thirds of those funds cover mandatory programs that will not be shut down. But he said some non-essential services and personnel may be affected. Brown also said many programs have received some of their appropriations from the federal government, so they have money on hand. But if the shutdown lasts, they may not receive their next allotment.

Brown said state agencies will ask their federal counterparts if state funds spent during the shutdown will be reimbursed. "If so, then there is no impact," he said.

If not, the state will have to repay money it borrows from itself. Brown said the General Assembly would need to address the deficit spending during its next session.

McDonnell said for Virginia, home to about 172,000 civilian defense employees and about 140,000 active-duty personnel, the most significant effect would be furloughs, which would reduce income tax revenue. "We estimate about one-third of federal workers could be furloughed," he said. "Certainly, nonessential services will be closed."

Brown said the state sales tax revenue would take a hit, but that would not be seen until the November reports. He also said localities' revenues also would be affected by a prolonged shutdown.

McDonnell blamed both the president and Congress for the situation, which he noted comes on the heels of sequestration. "Congress can't do its basic job of providing a budget. … They can't do the basic job of governing." He also blasted President Barack Obama, saying he had failed to lead.

While saying he was not a fan of the Affordable Care Act, he said "it is absolutely wrong to shut down government" in an effort to delay or defund the health care law.